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In this romantic comedy made in 2000, Mel Gibson plays an arrogant and sexist advertising executive who basically conducts business with men and seduces women. Although his business is built on women’s products, he has no clue when it comes to actually understanding women. One day, through a bizarre accident with a hairdryer and a bathtub he is given the power of “hearing women’s thoughts” as he passes them by in the corridor or the street. Suddenly he is completely in touch with “what women want.”
At this year’s Mobile World Congress event in Barcelona, Spain, one wondered sometimes if large sections of our industry have equally lost touch with what consumers want. Many of the announcements at MWC involved 3D, HD, RCS-E, smart LTE, quad-core phones, various “internets of things” and let’s not forget Nokia’s slightly bizarre 41-megapixel camera. But all of these seem at least five years ahead of what consumers out there are doing today – texting, downloading a few apps and a bit of surfing on the side (and they are the early adopters!).
This gap between what the industry wants to offer and what consumers actually want is wide and growing wider. This year, the divide is suddenly more significant because, as an industry, we have reached a tipping point. Existing VAS cash cows are now in established decline and there seems to be nothing new to take their place that consumers will actually pay for. The Financial Times reported on Feb. 21, that mobile VAS messaging revenues (mainly SMS) fell globally in 2011 by $14 billion – a 9% decline. This follows a decline in 2010, but this had never happened previously. It is mainly due to the rise of over-the-top SMS and MoIP services (e.g. WhatsApp messages passed the 1 billion-messages-a-day mark some weeks ago). The point? Realistically there is nothing to replace these revenues at the rate they are likely to fall.
As John Strand recently surmised: “It is important to understand that the next large growth market is not waiting just around the corner … prices are generally decreasing. The telco industries in most countries are experiencing decreasing revenues.”
So what do consumer want (men or women)?
There are three bread-and-butter pre-requisites for increasing data usage as SMS revenues drop off, and they do not require 3D, 41 megapixels, or for that matter, a hairdryer.
1. Improved network coverage: In survey after survey it seems that consumers will pay for things they understand, better network coverage for example, (see the 2011 survey by Telesperience. And yet this is not something we see anybody offering even with recent LTE launches which could enable quality of servie-based pricing. (The one possible exception being the femtocell, which curiously is a mobile operator’s way of going “over the top” of themselves to offer connectivity).
2. Longer lasting batteries: It’s not glamorous, but if our industry invested half the dollars we are throwing at new services into new battery research, we might actually start to see that step change in data usage. Battery technology has lagged services and content forever. Kudos to DoCoMo who announced their “10 minute ultra-fast charger” at MWC this year. Well O.K., on closer examination it appears that the phone has to sit in a sleeve for two hours and there only seems to be one phone in the world you can use – but at least DoCoMo understands the problem!
3. Easy-to-understand pricing: Simpler pricing means getting away from talking about megabytes which is rather like going to the supermarket and being billed for each product’s individual ingredients. We know we eat ingredients (megabytes), but we don’t like to billed that way because nobody thinks that way. We need to talk instead about things people can comprehend, such as specific services (e.g. zero-rated SMS, or premium video), using measures that people can relate to (e.g. hours of usage or number of uploads/downloads). And this needs to be bound up in a single price plan that may need to be shared across multiple devices or people. At least Verizon Wireless has now started looking to offer the latter.
We already know people respond to simpler billing. Most operators in developed countries can point to success in offering two-play (fixed telephony plus Internet) and then three or four play (plus mobile plus TV) services. People like it when life gets simpler!
There are solutions around that address these areas, but simplification in pricing needs to become commonplace.
So “what do consumers want?” – well maybe they will one day want the amazing products announced at this year’s MWC. In the meantime let’s get going with what we have. It’s not that the three elements above in themselves generate new revenues, but they do begin to dismantle the blocking factors people have around data usage: where they get upset about coverage, are restricted by limited battery life, and simply don’t understand pricing and so are too cautious to discover anything new.
